Federal Reserve - Represent Consumers

Stepping up on middle out: From rhetoric to reality

President Obama’s latest effort to portray himself as the champion of the middle class has so far been long on rhetoric and painfully short of real proposals.

The problem is that if smooth rhetoric alone could do the job, the economy would be humming along right now, not sputtering.

To get this done, the president is going to have to harness all of our fabled American know-how . He’s also going to have to adopt a quality that’s been too rare in our politics: the ability to admit mistakes and abandon failed policies. Tweaking the status quo is not going to get us anywhere. This is not the job for a temp.

I know it’s not just up to the president. We’re all going to have get involved. So here are my seven suggestions to help the president start to fill in the details that could take “middle out” into the realm of reality.

Some of them should be easy: the president already said he’d do them, like create a robust jobs program raise the minimum wage. Some of these proposals are bound to get the president out of his corporate-friendly comfort zone. But we need to get real - and so does the president. We should demand that the president stop pursuing policies that will further erode what’s left of the middle-class. Here’s my summons to President Obama:

Repudiate the Trans-Pacific Partnership: Take your pick: it’s either a “Free Trade Frankenstein,” as I described it previously, or “NAFTA on Steroids,” as it’s been labeled elsewhere. Either way it’s not free and has little to do with trade and everything to do with strengthening corporate rights around the globe and weakening protections for labor, the environment, local agriculture and generic drugs. We know from NAFTA that these phony deals kill jobs, not promote them. It’s the 2013 version of the Big Lie. You can’t be both for the middle class and the TPP. (If we let the president get away with this, our bad.)
Do something about African-American unemployment: The rate is 13.6, twice the national rate. For African-American youth, the rate is an unbelievable 42.6 percent, and worse this year than last. This is a national disgrace. Mr. President, you can’t advocate middle out economics and tolerate 42 percent unemployment for African-American youth – and we shouldn’t let you. Yes, Republicans will stand in your way. It’s your job to develop a strategy that doesn’t allow them to stop you from taking action.
Drop the loony “bipartisan” agreement that will allow student loan rates to float upward to an exorbitant beyond the usurious 8 percent range. Go back to the drawing board and lead an effort to reduce the cost of higher education, not just the relatively small portion that goes to paying the cost of a student loan. In the meantime, put a moratorium on student loan payments until the unemployment rate has stabilized at 5 percent. (Hat tip to investigative journalist Dave Lindhorff for that one.)
Push for your own American Jobs Act, the legislation you proposed in 2011 that would cut payroll taxes for businesses, double the size of the payroll tax cut for individuals, give aid to states to prevent public sector layoffs, and increase infrastructure spending. All together, the Jobs Act would create 1.9 million jobs. You haven’t mentioned it lately, but an updated version was recently reintroduced in Congress.
Make raising the minimum wage a top priority. It was a good idea when you proposed it back when you ran for president in 2008 and it’s a better idea now that you’re president in full control of your bully pulpit.
Dump Larry Summers as a candidate to run the Federal Reserve: You have a clear choice to make here. Summers is the Robert Rubin protégé who, under Bill Clinton, pushed the deregulation of high finance that led to the crash of 2008, and then helped craft the policies in your administration that propped up banks and bankers with unlimited amounts of nearly free cash but offered only the most tepid support to homeowners facing foreclosure and the unemployed. As far as the middle class goes, Summers has never missed a chance to get it wrong. Since he left your administration, he’s taken a job with too-big-to-fail Citibank. Your other choice is the current No. 2 at the Fed, Janet Yellen, who was one of those ignored voices expressing concerns about the banks before the crash, and continued to push the Fed toward fulfilling its obligations towards those in the country who aren’t wealthy bankers. Americans know the difference between these two. You can’t be both for Larry Summers and the survival of the middle class.
Don’t abandon Detroit: By standing aside, you are conceding the city’s future to the state’s right-wing governor, Rick Snyder, the banks and their lawyers to dictate the future of the city’s 700,000 residents. Snyder is downright hostile to the traditionally Democratic city and he’d like nothing better than to build his reputation with his conservative backers as the man who finally broke Detroit. The bankers have already done their best to pick the city clean. Detroiters would stand a much better chance with the resources and creativity of your administration on their side. You’ve shown that you know how to use federal authority to keep bankers afloat, now use it to help one of the nation’s great cities.

The Quiet Occupying of LA

The Occupy Movement changed the national policy debate last year, but then its supporters dispersed or – more accurately – were driven out of public parks by the police and winter.

A different kind of occupation has occurred, almost unnoticed, in Los Angeles over the last few weeks.

In late September, thousands of Californians waited in long lines at the Sports Arena in downtown Los Angeles for free medical and dental care provided by Care Harbor, a local non-profit organization. About 6.9 million Californians don’t have health insurance: about 1 in 5. They are not only the poor; about 27% of families making $50,000 or more each year are uninsured. Skyrocketing insurance rates, higher deductibles and dwindling benefits have left many in the middle class without insurance – or greatly under-insured, so that an unexpected illness or root canal can have a devastating financial impact. Thanks to the Financial Debacle, credit cards aren’t much of a fall back anymore. Hence the 3,754 patients, many of whom showed up three days early, grateful to receive the attention of thousands of doctors, dentists and other volunteering medical professionals, even if that meant being treated among strangers in a massive hall with no privacy. The sponsors of the event, now in its fourth year, call it a “health fair.”

Save the Dream

A week later and a few miles north, the line began forming early around the Convention Center, where more thousands hoped for a chance to refinance their mortgages in order to keep their homes. The five day event – part of a national tour it calls “Save the Dream”– was sponsored by the Neighborhood Assistance Corporation of America, another non-profit that has stepped into the breach opened by the failure of the marketplace. Operating in triage-like conditions in the conference hall, it arranged refinancing for beleaguered homeowners, many of whom were the victims of predatory lending, who would otherwise face foreclosure.

Monikers like “Health fair” or “Save the Dream” create a comforting, almost festive feeling about these occasions. But they can’t mask the despairing situation many of our fellow Americans now find themselves in.

The New Orleans Superdome 2005

The images of people seeking help with basic necessities – medical care, a place to live – reminded me of the breadlines of the Depression era, before the social safety net was put in place by FDR. The cavernous venues themselves recalled a more dire moment: the gruesome pictures from the New Orleans Superdome in 2005, to which residents were evacuated during Hurricane Katrina, and there left to fend for themselves for days. "I've seen things," NBC News anchor Brian William said of his time inside that nightmare, "I never thought I'd see in the United States."

The Occupy Wall Street supporters and their local affiliates across the nation were loud and angry enough to get the news media’s attention. A few instances of police brutality certainly helped. For all the many things the Occupy movement subsequently failed to do, like create a political force that could have been deployed in national and local election campaigns, just pointing out the wealth disparity – the 1% versus the 99% – vectored public attention from the abstraction of the national deficit to the concrete pocketbook issue of the imbalance of power between the powerful and everyone else.

But there was relatively little news coverage of the quiet, peaceful members of the 99-percent encircled around arenas that usually cater to business meetings or sports, people whose life stories have been derailed by credit default swaps, derivatives and other shenanigans by speculators over which they had no control.

Wall Street got it’s stimulus package – an estimated $29 trillion bailout, courtesy of U.S. taxpayers, in the form of cash infusions, tax breaks, and the ability to borrow at an almost zero interest rate from the Federal Reserve. But Main Street’s stimulus package was $700 million – demonstrably not enough to do the job of getting Americans back in their jobs.

Compare the two stimulus packages and explain to me why we can’t afford to address the plight of job-less, home-less and savings-less Americans.

The total debt owed by consumers in this country for loans and credit cards is roughly $12 trillion, according to the latest report. Every dollar of it could have been erased (including everyone’s mortgage debt!) if those trillion$ had gone to taxpayers instead of Wall Street, as I’ve pointed out previously. Imagine the powerful spending effect on the economy if Americans were given the right to borrow from the Fed at the same low rate that the banks do. Or if someone in Congress or the White House had thought to impose a modest cap on interest rates for consumers as a quid pro quo for the bailout money that went to those firms.

Wall Street and its allies in government have tried to diminish the significance of the bailout, noting that most banks and other corporate beneficiaries have repaid most of the money. But that’s not the right way to gauge the value of what the taxpayers did for them.

Say two people are in a boat when it capsizes. One of them, the captain, throws a life preserver to his passenger. The passenger survives, but the captain drowns. Wall Street would measure the value of that transaction by the cost of the life preserver. The rest of us would say that the rescue came at a much, much higher price. That price can be measured by the anguish and fear on the faces of those waiting for big box style medical and financial assistance at the Sports Arena and Convention Center.

Federal Reserve / Harvey Column / Tax breaks - 10/11/2012

Three Major Issues The Presidential Candidates Are Ignoring

What if they held an election but didn’t discuss the most important economic issues?

That’s what’s happening here in 2012.

Yes, taxes and the deficit are significant. But there are even more crucial issues that will determine whether the country continues to slide into wider income inequality and destroys what’s left of the middle class.

And these three crucial issues have been barely mentioned during a campaign obsessed with who pays what in taxes and who doesn’t.

Dean Baker, of the Center on Economic Policy Research, neatly summed up several of the left-out issues recently.

On one of the most critical economic issues, the so-called free trade pacts such as NAFTA and the more recent Korean trade agreement, both parties agree: they favor them.

The media cooperates in keeping this issue off the table by repeating the misleading claims of proponents of the agreements while omitting or marginalizing critics.

“Free trade” is really the big lie of our economy and our politics. As the critics point out, these agreements should be accurately labeled “corporate rights agreements” since they are much more concerned with that issue than with trade. Not only do they result in lower wages in the U.S. and devastated small farming in other countries, these agreements allow corporations to challenge environmental and labor protections in special courts in which the public has no voice.

Both parties crank up the rhetoric to promote the notion that the “free trade” is the road to economic prosperity for everybody. But as Baker points out, the reality of “free trade” is far grimmer for those that work for wages to earn a living because it puts “downward pressure on the wages of manufacturing workers by putting them in direct competition with low-wage workers in the developing world.”

The absence of any discussion of these agreements in the political debate exposes a major fraud on the part of both parties. While the Democrats tout themselves as the party of the little guy, their support for “free trade” shows how closely they hew to the corporate agenda on issues that matter most. For the Republicans, their support for “free trade” agreements which, in the real world, prop up some corporations while punishing others shows they’re less interested in picking economic winners and losers than their free market rhetoric lets on.

And there’s a huge trade deal being secretly negotiated right now, the Trans-Pacific Partnership (TPP), which I previously wrote about here, calling it a Free Trade Frankenstein. Others have called it “NAFTA on steroids.” As with other trade negotiations, the public has been kept out while the corporate lobbyists have full access.

The only TPP issue on which the president and his challenger disagree is who could whip out his pen faster and sign the TPP once the secret negotiations are concluded.

The second major economic issue left out of this election is the deeply unpopular 2008 bailout of the financial sector and corporate America, including the $700 billion Troubled Asset Relief Program and the $16 trillion in cheap or free loans the Federal Reserve provided to corporate America in the wake of the financial collapse.

All this financial assistance was provided with little public debate and without any conditions imposed on the recipients.

The Obama administration dismisses all questions about the bailout by insisting that all the TARP money has been paid back. Case closed, the administration contends.

But could a different kind of bailout, one which imposed specific conditions on banks and corporations, helped more struggling Americans than the one we got, which propped up bank and corporate executives? Why did those portions of TARP that were targeted at ordinary Americans facing foreclosure fail so badly?

And how does this bailout, which picked winners and losers, jibe with the Republicans’ free market rhetoric? What about a belated bailout for the rest of us? Plenty of fodder for tough questions for the president and his challenger, if anybody cared to ask.

The third issue is one that the two parties have disagreed on: increasing the minimum wage.

As a candidate in 2008, President Obama promised to raise the federal minimum wage from $7.25 an hour to $9.50 by 2011 but has taken no action to do so. For his part, Republican challenger Mitt Romney has said he favors tying the minimum wage to inflation, until the right wing of his party objected.

According to a recent paper by the Economic Policy Institute, phasing in the $9.80 minimum wage would raise the wages for 28 million workers, who would earn an additional $40 billion during the phase-in, while gross domestic product would increase by $25 billion and 100,000 new jobs would be created.

We need a robust debate on these issues in the remaining weeks of the presidential campaign that challenges the president and Mr. Romney on where they stand and what actions they’ll take, not just a stale rehash of the same old arguments on taxes. But we won’t get that debate unless we demand it.

Federal Reserve / Income inequality / Martin Column / Mitt Romney / TARP / TPP - 09/25/2012

Bankers' gambles – now with a bailout guaranteed

After the 2008 banks bailout, we were promised that financial reform was going to prevent future bailouts.

Never again.

But as we approach the fourth anniversary of the financial collapse, we’re learning just how hollow those promises were.

The most recent example stems from reports that regulators have secretly designated derivatives clearinghouses too big to fail in a financial emergency.

That means that in a crisis, such clearinghouses, in which risky credit default swaps are traded, would be bailed out at taxpayer expense through secret access to cheap money at the Federal Reserve’s credit window.

That’s where the big banks and the rest of corporate America lined after the 2008 to borrow trillions at low interest – with no strings attached.

The Fed didn’t require the banks to share that low interest with consumers or homeowners. The Fed didn’t require that banks make some attempt to fix the foreclosure mess. The Fed didn’t require corporations hire the unemployed or lower outrageous CEO pay.

The Fed just shoveled out the cheap loans.

Now the Fed is planning to extend that generosity, as a matter of policy, to derivative clearinghouses – which puts taxpayers directly on the hook for Wall Street’s risky gambles, like the ones that recently cost J.P. Morgan Chase $2 billion.

While those trades didn’t threaten to sink the economy, it was the unraveling of those kinds of complex gambles that tanked the economy in 2008.

Nobody knows for sure how large the derivatives market is, but the estimates are truly mind-boggling. One derivatives expert estimates that there were $1.2 quadrillion in derivatives last year – 20 times the size of the world’s economy.

While requiring these derivatives to be traded on clearinghouses is supposed to increase transparency, that assumes regulators are aggressive, diligent and understand the trades.

But signaling that these derivatives should be eligible for a bailout is nothing short of insane, at least from the taxpayers’ perspective. From the bankers’ perspective, it’s a pretty good deal, and a reassuring indication that nothing much has changed since the financial crisis: the regulators are still deep in the bankers’ pocket.

Meanwhile, the real reforms that might have a shot at actually fixing the problems and protecting our economy from the big bankers’ addiction to risk get little or no consideration in what passes for political debate.

The best step we could take is to re-impose the Depression-era Glass-Steagall Act, which creates walls between safe, vanilla, and consumer banking (which have traditionally been federally guaranteed, and riskier investment banking and derivatives trading But the bankers oppose Glass-Steagall, and for the present, they remain in control of both political parties and the regulators’ financial policies.

Federal Reserve / Glass-Steagel / Martin Column - 06/26/2012

Bottom Line on Fed Bailout is No Secret

Were the bankers and Federal Reserve trying to hide something in particular? Or were they just fighting Bloomberg’s lawsuit to reveal the details of the Fed’s sweetheart bailout loans out of habitual arrogance?

I’ve been wondering about this as I make my way through Bloomberg’s expose based on the data the news service forced the Fed to turn over after several years of litigation.

The Fed and the banks tried to scare the courts into keeping the data secret, warning that disclosure would stigmatize those who received the low interest loans and cause them irreparable harm.

Finally, the courts saw through all the Fed’s and the bank’s bogus arguments and ordered the data made public.

The numbers are all so mind-bogglingly huge that it’s easy to be overwhelmed, for the information to lose it’s meaning. But as Columbia Journalism Review’s The Audit pointed out, Bloomberg went straight to the heart of the issue, reminding us what kind of a bailout our politicians delivered, in which banks and other corporations got access to $1.2 trillion in low-interest loans – about the same amount U.S. homeowners are struggling with on 6.5 million delinquent or foreclosed mortgages.

But as RJ Eskow reminds us, we knew a lot of the grisly details before the latest data dump – like that the 10 largest banks got $667 billion in low-interest loans from the Fed.

What we didn’t know until now is how much of that money was an outright gift from taxpayers; Eskow estimates that it amounts to about $27 million on each $1 billion worth of loan, based on the difference between the usual 3.8 percent interest rate and the 1.1 sweetheart rate the Fed charged as part of its bailout. Because the Fed attached no strings to its generosity to the banks, the bankers never paid it forward to the rest of us, who saw our access to credit shrink. And it never occurred to the Fed that it might have stimulated the economy with a few well-placed low-interest loans to the rest of us.

The bottom line is that the Fed shouldn’t be handing out trillions of dollars without any accountability or transparency. Most Americans are not going to have wade through the details to confirm their gut feeling – we’re getting screwed.

Federal Reserve / Martin Column - 08/26/2011

D.C. Disconnect: Beltway Media Edition

The historic first ever Federal Reserve press conference delivered even less than the little that was expected.

That was in part because Fed chair Bernanke is good at making economic policy boring and opaque.

After all, that is his job.

But the reporters who cover the Fed have no such excuse.

At the press conference, they shared none of the outrage that continues to be expressed by the rabble outside Washington who are upset by the Fed’s bailout of big banks, and who fought to make the agency more transparent.

The whole thing had the flavor of a rote exercise, featuring people who appeared to be sleepwalking rather than covering the secretive agency that handed out trillions to the financial industry with no questions asked.

There was no skepticism, no appearance that the reporters had done their homework to challenge the Fed’s behavior in boosting banks while abandoning working people. There was none of the excitement that reporters worked up for the non-story of Obama’s birth certificate.

The press conference confirmed what we already knew: federal authorities, including Bernanke have abandoned the unemployed. They’ve moved on. Although employment is one of two of Bernanke’s mandates, he insists his hands are tied.

The reporters participating in this historic occasion treated the bailout as old news. Somehow they managed to miss that every time the Fed provides information about its actions in the bailout, it raises more questions than it answers.

Thankfully, not everybody in Washington shares this view. Sen. Bernie Sanders, the independent socialist from Vermont who caucuses with the Democrats, has been doing his best to dog the Fed.

A day before Bernanke held his press conference; Sanders released the results of a study he ordered from the Congressional Research Service of the Fed’s secret lending program. That study showed how the big banks gamed the bailout, profiting from investing the low interest loans the Fed gave them rather than loaning the money to businesses to get the economy going.

Sanders put out a press release with a catchy headline – “Banks Play Shell Game With Taxpayer Dollars.” This wasn’t enough to rouse the reporters who cover the Fed; nobody could be bothered to ask Bernanke about it as his press conference. According to the research service, the banks pocketed interest rates 12 percent greater than the low-interest emergency loans the Fed was giving them. The purpose of this emergency loan program had nothing to do with enriching bankers; it was justified only because we were told it was the only thing that would get the economy going.

It’s worth remembering that Bernanke and the Fed fought a losing battle against the release of any details about its secret lending program. You would have thought the reporters would have welcomed the opportunity to subject Bernanke’s decision-making to public scrutiny.

Federal Reserve / Martin Column / Outrage - 04/28/2011

Feds Unsettle Foreclosure Abuses

Wall Street is apparently about to win another round as federal regulators prepare to sign off on a “slap on the wrist” settlement stemming from widespread abuses in the foreclosure process.

The settlement continues the federal policy of relying entirely on the banks’ voluntary compliance, despite repeated examples of banks using fraudulent and forged documents to foreclosure on homeowners. The settlement apparently imposes no fines.

“Judges don’t tell burglars to go design their own plan to stop breaking into people’s homes and report back in 30 days,” said Rev. Lucy Kolin of the PICO National Network in response to the settlement, which is supposed to be announced later this week. “A judge would get laughed off the bench if they did this, and yet this is exactly what the Fed, OCC and FDIC have chosen to do.”

At Credit Slips, Georgetown Law prof Adam Levitin first labels the proposed settlement “Potempkin regulation,” then decides the better analogy for where we are on bank regulation is the “inmates running the asylum.”

The Obama administration’s lack of enthusiasm for holding the big banks accountable doesn’t exactly come as a surprise. Dog bites man.
They were supposed to working with the 50 state attorneys general to investigate the extent and impact of the foreclosure problems, but the attorneys general and the Fed have yet to conduct an investigation worthy of the name, as if they were investigating violations of law, which they should be. If the Feds and the AG's insist on negotiations with the banks, negotiation without robust investigation is a recipe for disaster.

What’s left unclear by reports of the proposed settlement is whether the state AGs are now free to pursue investigations and remedies on their own or whether the settlement will undercut them.

That’s especially relevant in places like California, where the state’s new attorney general, Kamala Harris, ran a strong election campaign promising to protect homeowners from foreclosure abuses and to hold banks accountable. During the “negotiations”, Harris hasn’t had much, if anything, to say. Her office hasn’t been returning my calls.

Now that the Feds have once again caved in to the big banks, Harris will have the opportunity to keep her campaign promises and enforce the law equally. Homeowners will be counting on her.

Around the Web / Federal Reserve / Foreclosure / Martin Column - 04/07/2011

Going Without Heat For Goldman-Sachs

With all the trillions tossed around in the government’s efforts to prop up the big banks, a $2.9 billion taxpayer-funded windfall to Goldman-Sachs might not sound like that big a deal.

But imagine if we still had that $2.9 billion, if it was still in the federal coffers and not in the pockets of Goldman bankers.

Maybe President Obama wouldn’t feel the need to cut off aid for poor people to help pay for heating oil through the cold winter – that $2.9 billion would more than pay for the proposed cuts.

Maybe you’re not in favor of helping poor people stay warm in the winter.

How about space travel?

That $2.9 billion could pay for nearly a year’s worth of research on manned space travel, which is also under threat.

But what did we taxpayers get from this generosity to Goldman Sachs?

Absolutely nothing. Worse than that, we rewarded extremely bad behavior.

The $2.9 billion payment was arranged by federal authorities as part of what they have described as their emergency efforts to salvage the financial system in the wake of the financial collapse brought on by the bankers’ greed, recklessness and fraud, enabled by regulators’ laxity.

The Federal Reserve, which was supposed to be overseeing this massive giveaway to the banks, contends it didn’t intend to give the windfall to Goldman-Sachs bankers. It was just $2.9 billion that got away from them in their hurry to fill the bankers’ pockets with our cash- I mean- save the economy. McClatchy News Service, using bland journalism-speak, calls it a “potentially huge regulatory omission.”

Goldman hit the jackpot on our bailout of AIG, in which taxpayers compensated the firm 100 cents on the dollar for bad proprietary trades. That means Goldman gambled with its own money, which it is entirely entitled to do.

But when they lose their money, as the old blues song says, they should “learn to lose.”

Lucky for Goldman, we’re there to pick them up, dust them off and wish them well, no questions asked.

Just how much longer are we going to allow our public officials, Republican and Democrat, to use our money to foot the bill for these deadbeats’ bad gambling debts?

Just how many people are going to have to go cold before we cut Goldman off?

AIG / Around the Web / Federal Reserve / Financial Crisis / Goldman-Sachs / Martin Column / Outrage / President Barack Obama / Too Big To Fail - 02/18/2011

What Have You Done For General Electric Lately?

With your help, the company founded by Thomas Edison, the genius inventor, survived the nation’s worst recession in 80 years.

But billions in taxpayer-funded bailout relief and subsidies and paying zero federal taxes was not enough for General Electric.

The company wants more from you.

They want more subsidies, more dubious government contracts and more political power.

Business was terrible for a while, and GE’s credit division dragged the whole company down.

As result, 19,000 of the GE employees who had a job at the beginning of 2009 didn’t have one when the year ended. They joined the 4,000 GE employees who lost jobs the year before. For workers that still had jobs, the average salary was about $32,000 a year.

Things were tough at the top too.

CEO Jeffrey Immelt had to give up his bonus for the second year in a row, and was forced to limp along just on his annual compensation of nearly $10 million.

In 2008, Forbes magazine named Immelt one the U.S.’ 5 most overpaid bosses. For the past 6 years he’d been averaging $15 million a year.

Of course, before the economy crashed, CEO pay was through the roof in general. Getting on that most overpaid list wasn’t easy. Competition was stiff. Two of the other guys on the Forbes list made millions running their financial firms, Countrywide and Indymac, into the ground.

Taxpayers’ generosity helped ease the GE titans’ pain, allowing the company to take advantage of billions in subsidized loans and loan guarantees at such favorable interest rates that they amount to a massive government subsidy.

The company managed to eke out $11 billion in profits on $157 billion in revenue.

That’s when the Internal Revenue Service stepped in to ease GE’s burden. By the time the lawyers and accountants were done, you probably paid more taxes than GE did – unless you also happen to be Exxon.

GE didn’t issue a press release about most of those subsidies. Neither did the federal government. In fact, the Federal Reserve has fought to keep its subsidies of GE and other major corporations confidential. But they were forced to disclose the subsidies under the terms of the financial reform passed earlier this year.

It might have been made the Federal Reserve and GE uncomfortable if the public had known that GE’s CEO was sitting on the Fed’s board of governors while they were doling out low-interest loans to his company, an apparent and outrageous conflict of interest.

But your generosity to GE doesn’t stop with bailout and tax giveaways. As part of the 2009 stimulus package, the company got $24.9 million toward retooling an appliance factory in Kentucky, one of four plants GE is retooling in the government’s green technology initiative.

Like Immelt, the workers will have to adjust to lower pay. They’ll no longer make $20 an hour. Now they’ll be paid $13 an hour.

The company is returning to its roots in making appliances.

But the retooling comes too late for GE’s light bulb business, which was once a source of good jobs in Ohio. While it was borrowing taxpayers’ money in 2009, it was closing one such plant in Niles, Ohio – the fifteenth to close in the state since 1980. The new more energy efficient bulbs will be made in China.

As GE and others American firms were busy chasing short-term profits from the fancy financial products that eventually blew up the economy, they neglected the kinds of innovation that might have saved those jobs.

But General Electric has moved on, staking a big chunk of its future on a costly jet engine that the Defense Department says is wasteful and that it doesn’t want. So General Electric has been lobbying Congress to override the Defense Department. Maybe those that worked in the light bulb factories of Ohio could move to Washington and get jobs as lobbyists. GE’s spending on lobbying has skyrocketed: from $4.54 million in the first quarter a year ago to $7.14 million in the first quarter of this year.

Meanwhile, while GE dukes it out in D.C., the company has informed the state of Massachusetts that if it expects GE to limit layoffs of those working at an aircraft factory there, the state’s taxpayers are going to pay.

At the same time the state is facing a series of devastating budget cuts, GE is seeking a $25 million tax credit to help with the retooling of it plant in Lynn, which employs 3,000 people. The company’s already cut 600 jobs at the plant, without the tax credit, GE says, it will cut more. Usually states give tax credits for companies to create new jobs, not as a payoff to keep them from cutting existing jobs.

So here’s the latest innovation from GE. It has nothing to do with creating better, more energy-efficient products. GE has come up with a new way to put the squeeze on taxpayers.

Executive Pay / Federal Reserve / Martin Column / Outrage - 12/19/2010

In Taxbreakistan, the Usual Casualties

Rather than confronting the country’s growing economic disparity and attempting to reduce it, our political leaders are pursuing policies that just make it worse.

Remember when we were told that the bailout was supposed to save our economy? It worked amazingly well for those who are well off – the banks are back in the black, the bankers are pocketing huge bonuses, corporate profits are soaring and the stock market is humming along.

But for those less fortunate, the situation remains dire: unemployment is stuck around 10 percent, wages are stagnant, state and local governments face staggering cutbacks in all services, and foreclosures continue unabated.

The most recent example of this glaring callousness is the deal President Obama reached with GOP leaders to extend the Bush-era tax cuts for 2 years in exchange for keeping unemployment compensation coming for 13 months.

Both the president and the Republicans profess to be unhappy with everything they had to give up and said nasty things about each other. The president insisted it was simply the best deal to be had to get some stimulus in the face of Republican intransigence. But the president never took to the airwaves to challenge the Republicans on the tax cuts or the unemployment insurance. After his party’s “shellacking” in the midterms, he just headed for the back room to make a deal on his own, without ever trying to galvanize public opinion, which according to the polls, wasn’t even sympathetic to the high-end tax cuts.

So far the Senate has appears ready to pass the deal with votes to spare but the House has balked.

Back when he was candidate Obama, the president had no qualms about proclaiming just how unfair the tax cuts for the wealthiest were, how little they do for the rest of the economy, and how worthy they were of opposing. Now the president labels as `sanctimonious’ those who agree with the position he took so forcefully when he ran for president.

But the tax cuts for the wealthy won’t work any better now that that they’re the Obama tax cuts than they did when they were the Bush tax cuts.

The Center for American Progress breaks the $954 billion Obama tax cut deal into two parts: first, a $133 billion tax cut for the wealthiest, including $120 billion in lower taxes for the top 2% of U.S. households, plus $13 billion in estate tax savings. The other $821 billion consists of government cash for unemployment benefits, tax cuts for the middle class and small-business job-creation incentives.

The deal is supposed to create somewhere between 2.2 and 3.1 million jobs, though some find those estimates vastly inflated. CAP contends that the deal offers a relatively expensive way to create those jobs.

Economist Dean Baker questions a lot of the phony hysterics being used to sell the deal as scare tactics. He doubts the president’s assertion that is the only way or last chance to extend unemployment benefits. If unemployment stays above 8 percent as the Federal Reserve projects that it will, both Republicans and the president will feel pressure to extend benefits.

But one of the worst aspects of the deal is the way that it actually raises taxes on the working poor, according to the Tax Policy Center. That’s because the president has agreed, as part of the deal, to phase out his own Making Work Pay tax cut (implemented as part of his previous stimulus package) and replaced it with a temporary Social Security payroll tax cut. The Making Work Pay tax cut was focused on the working poor, giving single people with incomes of at least $6,452 and less than $75,000 a $400 tax break and couples making less than $120,000 an $800 tax break. People at the lower end of those income ranges would do worse under the present Obama tax cut deal. Wealthier taxpayers meanwhile, stand to do better with the payroll tax break than they did under Making Work Pay, which phased out at higher income brackets.

To me the tax deal looks suspiciously like the bailout – shoveling money to those who have suffered the least, without any conditions imposed to require that they plow some of that cash back into the economy, only the vain hope that they will share their prosperity.

We assumed that’s what the bailout recipients would do with all of our tax money.

We know now how that worked out.

Federal Reserve / Martin Column / President Barack Obama / TARP - 12/14/2010